Archive | The Joneses

Go Gecko stays committed to lower commissions in wake of Joneses failure

Published 19 February 2008

Go Gecko Group chief executive Phil Strong leapt into the fray over real estate commissions today, in the wake of the collapse of The Joneses and a claim by national Real Estate Institute president Murray Cleland that discount models don’t work.

 

Said Mr Strong: “Lower priced commissions do work … even if the REINZ president doesn’t want to admit it….

 

“In claiming discount models don’t work, he has apparently forgotten about some of his other Real Estate Institute members who have successfully been selling property for lower commissions for a number of years.

 

“Go Gecko was the first in the market offering lower-priced commissions and we are still here.

 

“The Joneses didn’t fail because of their lower-priced commissions. There were many other factors in their business model that were the real reasons for the downfall.

 

“A centralised model will always struggle to provide the personal connection & local market knowledge. A central call centre with staff that have never even visited the properties does not work in real estate. And paying salespeople a salary takes away the motivation to work hard after-hours to bring a deal together. Those are the reasons I think their model failed.”

 

Mr Strong said commissions had nearly doubled since 2001, for the same amount of work. On the 2001 median sale price of $172,500, the average commission was $8325.  On today’s median sale price of $347,450, the average commission had risen to $15,130 (at 4% to $300,000, 2% thereafter, $500 base fee plus gst).

 

“We still believe the real estate industry needs a major shake-up. Vendors are paying too much in commission – as can be seen by how much commissions have jumped in the last 7 years.

 

“Go Gecko has been successfully offering vendors lower commissions since mid-2005.  We were here before The Joneses, and we’re still here. We’re proof that sensible commissions do work. But it’s only possible because we also focus on providing a high level of personal service with local offices & local connections.”

 

Earlier stories:

19 February 2008: The Joneses listing fails, liquidators called in

12 December 2007: The Joneses to list on NZAX through Wilkinson shell

 

Want to comment? Click on The new BD Central Forum or email [email protected].

 

Attribution: Company release, story written by Bob Dey for this website.

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The Joneses listing fails, liquidators called in

Published 19 February 2008

The Joneses real estate company took a bigger dive yesterday than the industry it’s tried to break into with a no-commission flat-rate offer to vendors.

 

I heard an industry leader say on TV last night the cut-rate proposition plainly didn’t work. Maybe offering vendors a flat rate didn’t work, though it can hardly have made it past a trial stage. What really didn’t work was a capital-raising in a market where that had become virtually impossible, and the creation of a real estate sales business at the turn down from the top of the market. No matter how bright the idea, trying to do both the capital-raising & the market entry in this climate showed unwarranted optimism.

 

So TJRE Holdings Ltd, the sole shareholder of The Joneses Real Estate Ltd, placed The Joneses in voluntary liquidation.

 

TJRE had proposed making a backdoor NZAX listing through a Brett Wilkinson shell, RLV No 3 Ltd. TJRE’s directors said they needed to raise $1.5-4 million in new capital and didn’t get enough. They explored alternative funding sources for the real estate business but director Chris Taylor said these wouldn’t have given the business the cashflow it needed.

 

Mr Taylor said sale & purchase deposits were held in a trust account so they weren’t at risk. He didn’t mention the costs to vendors of abruptly halted promotions.

 

Liquidators are Arron Heath & Mike Lamacraft (Meltzer Mason Heath).

 

Earlier story:

12 December 2007: The Joneses to list on NZAX through Wilkinson shell

 

Want to comment? Click on The new BD Central Forum or email [email protected].

 

Attribution: Company release, story written by Bob Dey for this website.

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The Joneses to list on NZAX through Wilkinson shell

Published 12 December 2007

National real estate firm The Joneses has entered into an agreement with NZAX-listed company RLV No 3 Ltd, headed by backdoor-listing exponent Brett Wilkinson, beginning a process that will see The Joneses listing on the sharemarket in early 2008.

 

Subject to further capital raising and final shareholder approval, RLV will acquire all the shares in TJRE Holdings Ltd, the holding company for The Joneses residential real estate business, for $13.75 million.

 

The Joneses sprang to prominence, first by offering to sell properties for a fixed fee instead of the industry’s standard commission base, then after the Real Estate Institute called a disciplinary hearing alleging director Chris Taylor had brought the industry into disrepute. He was cleared in October.

 

TJRE Holdings director Mr Taylor, who’s a former Vodafone NZ Ltd director, said becoming a listed company was a natural progression for The Joneses: “We’ve always believed New Zealander investors would welcome the opportunity to have a stake in this huge industry that until now has always been in private hands.

“Furthermore, our new financial structure will enable us as a company to continue innovating and developing new services which will transform the way real estate is sold in New Zealand.”

 

While the process of listing the business on the NZAX changed the capital structure of the holding company, Mr Taylor said it was business as usual for the trading company and The Joneses was continuing to grow & win customers.

 

In a little over a year, The Joneses has opened offices in Dunedin, Christchurch, Wellington & Auckland. Mr Taylor said it had generated considerable customer demand for services which allow home owners to sell houses for a fixed fee that’s less than half the average commission paid to real estate agents.

 

Longtime real estate agent Peter Gilchrist, of Dunedin, founded The Joneses with 3 experienced business people – Mr Taylor, Chris Knox & Peter Botica, all of Auckland – who saw an opportunity to develop a new business model for the $1.2 billion/year market in residential real estate sales.

 

When the transaction with RLV is completed, RLV’s current directors will resign and be replaced by representatives to be nominated by TJRE Holdings. RLV also plans to change its name to The Joneses Group Ltd. The company may also undertake a consolidation of its shares.

 

Website: The Joneses

 

Want to comment? Click on The new BD Central Forum or email [email protected].

 

Attribution: Company release, story written by Bob Dey for this website.

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